DragonFi Securities Inc. has gained approval from the Securities and Exchange Commission (SEC) to test a new framework for over-the-counter (OTC) depositary receipts. This initiative aims to provide Filipino investors with access to select U.S. equities and exchange-traded funds.
First Licensed Broker-Dealer in SEC's Sandbox
This makes DragonFi the first licensed broker-dealer in the Philippines to operate under the SEC's Strategic Sandbox (StratBox) program for global equity offerings.
Filipinos should be able to participate in the world’s largest capital markets through a structure that is locally regulated, transparent and built with investor protection at its core.
Jon Carlo Lim, CEO of DragonFi
- Investors with certified domestic stock portfolios can access foreign offerings worth up to 50% of their local holdings.
- Investors with Personal Equity and Retirement Account (PERA) assets may access foreign equities up to 100% of the equivalent value of their domestic PERA portfolio.
Under the proposed structure, OTC depositary receipts will serve as local counterparts for each foreign asset. Cash reserves and foreign equities will be held in segregated institutional custody accounts with international financial partners.
The SEC will oversee the testing phase, which will occur in a controlled environment as outlined in SEC Memorandum Circular No. 9, Series of 2024. This phase will evaluate operational stability and investor protection measures.
SEC Commissioner McJill Bryant T. Fernandez emphasized that the sandbox framework allows for innovative approaches to global asset access while maintaining market integrity.
The initial testing will include a limited group of users, with broader access subject to further review by the SEC after DragonFi's amended testing plan is validated.